TIOL-DDT 992 · the untouched capture
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<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT
992</font><br>
14.11.2008<br>
Friday</strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax Department revamps Review and Inspection</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The present system of review of assessments by the Administrative Commissioner was introduced in 2002 subsequent to the restructuring of the Income tax Department. Under the existing system of Inspection also the Inspecting Officer is required to comment on selected assessment orders.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As this was resulting in a duplication of the review function, CBDT has decided to do away with the requirement to give comments on selected assessment orders as part of the Annual Inspections.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>BOARD</strong> has also noticed that centralisation of review work with administrative Commissioners alone was resulting in inordinate workload with these officers, which was in turn affecting the quality of the Review reports.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In view of these factors, Board has decided to make a clear distinction between the objectives and the contents of the Annual Inspections and Reviews. It has also decided to lay down new guidelines for review of the assessment work of Officers having assessment jurisdiction.</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Review will henceforth form an ongoing function of the supervisory officer for monitoring the quality of assessment work being done during the year by Assessing Officers under their supervisory control.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The basic purpose of Reviews will remain unchanged viz. to ensure that all issues arising for consideration in the relevant assessment have been considered, the evidence required to examine these has been collected, rival arguments are analysed in the assessment order and a fair and balanced finding recorded.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. During these reviews, the Reviewing Officer should give specific comments on the overall quality of assessment work of the officer as evident from the assessments done during the quarter and record specific observations on a few select cases.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. He should also comment on whether relevant Instructions of the Board, such as regarding selection of cases for scrutiny, utilisation of information in audit reports/AIR, etc have been properly followed.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. As part of their Review report, the Reporting Officer should give overall comments on the assessment work of the Assessing Officer as seen from the assessment orders passed during the preceding quarter and record specific comments on at least three assessment cases of each officer per quarter; in the review of assessment work of Additional Commissioners/Joint Commissioners this may be restricted to one assessment order per quarter.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. The Reviewing Officers may plan their work in a manner that review in respect of all <strong>concerned </strong> officers takes place in every quarter. Considering that one half of the year is already over, the Review work for Quarters ending 30th September and 31st December may be completed by 31st March 2009.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. Where an officer is holding an additional charge, he will be responsible for the Review work of the additional charge also.</font></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2008/instruct0815.htm" target="_blank">CBDT Instruction NO. 15/2008, Dated: November 4, 2008</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>CBDT Instructions on Inspections</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The present system of Inspections was introduced on an assumption that in post-restructuring scenario, Range would form the basic unit for assessment work. Its focus was on inspection of functioning of a Range in two selected fortnights and it included inspection of a few selected assessments made by the Assessing Officers. However, the concept of Range as an assessment unit could not be implemented in its entirety due to various constraints. Therefore, the system of Inspection could not fulfil its desired objectives.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board had, therefore appointed a committee under DGIT (Systems) to examine the current system of Inspections and Reviews and to recommend changes so as to bring it in tune with the current structure and work practices of the Department.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Based on the report of the Committee, Board has decided to revamp the existing system of Inspections and Reviews.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Under the revised procedure, inspections will involve an annual comprehensive inspection of the office. The Inspecting Officer will examine and comment on the overall functioning of the office in the light of various Government Instructions in general and CBDT Instructions in particular. However, it will not be necessary to give comments on select assessment orders as part of inspection, as this will be done during Review of the assessments, instructions in respect of which are issued separately (please see the report above).</font></p>
<div align="justify">
<blockquote>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. During these Inspections the work done in the preceding financial year will be examined by the Inspecting Officer in a comprehensive manner with a view to bring out the strengths and weaknesses of the work practices being followed in that office with a view to strengthen the administrative machinery.</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. The Inspecting Officer will also highlight achievements and shortcomings of the concerned officers in the key areas of their work.
</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. These Inspections should be conducted with reference to the prescribed proforma containing a set of questions covering various areas of work being conducted in that office.</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. The Inspecting officer should examine the records and other material needed to answer these questions and give a balanced narrative answer to the same. He may also give separate comments on any other issue of importance that comes to his notice.</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. The Inspecting Officers may plan the Inspection work so that Inspection of at least one office is carried out in every quarter and the entire Inspection work is completed by the end of the financial year.</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">6. Where an Inspecting officer is holding an additional charge, he will also be responsible for conducting Inspections in respect of the additional charge also.</font> </p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">7. A new Inspection Proforma has been prescribed.</font></p>
</blockquote>
</div>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the CBEC follow suit and issue similar instructions?</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=67&filename=notification/cbdt/2008/instruct0816.htm" target="_blank">CBDT Instruction NO. 16/2008, Dated: November 4, 2008</a></strong></font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Inflation as the Government sees it</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">As per the statement of Department of Economic Affairs, Ministry of Finance on inflation issued yesterday:</font></p>
<blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">1. Annual rate of inflation, year on year as conventionally measured, declined to 8.98 per cent for the week ending November 1, 2008 compared to a rate of 10.72 per cent reported in the previous week and 12.91 per cent on the week ending August 2, 2008.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. Wholesale price index in the current week declined by 1.26 per cent from 238.5 as on October 25, 2008 to 235.5 on November 1, 2008.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. Inflation declined to a single digit level after 21 weeks. <strong>Inflation in the same period as on November 3, 2007 in the previous year at 3.35 per cent, however, was significantly lower</strong>.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">4. In the case of ‘manufactured products', rate of inflation in the current week further declined to 8.06 per cent, as compared to 9.09 per cent in previous week. Out of 318 commodities, a large number, 284 in all, have shown no increase in prices over the last week.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">5. Inflation of 30 essential commodities increased to 7.74 per cent as on the week ending November 1, 2008 from 7.51 per cent reported in the earlier week. There was a decline in the prices of 5 of these commodities and prices of other 16 commodities remained unchanged. Prices of remaining 9 items, viz. rice, jowar, bajra, gram, arhar, masur, potatoes, mutton, and gur witnessed some increase.</font></p>
</blockquote>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Heroin Capital</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Capital and surroundings seem to be swooning with tons of heroin – perhaps the most popular narcotic. The Police, DRI and all other enforcement agencies are seizing huge quantities almost every day with boring regularity. On a particular day even before we could start reporting about a seizure, there was another report coming in that there was another seizure.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, not to be left out, the CBI yesterday seized 6.6. kgs of heroin from a Delhi residence.</font></p>
<p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>The
Crusader’s
Column</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The
Crusader is back – with us. Shiva Kant Jha, a former Chief Commissioner
of Income Tax who resembles RK Laxman's common man in looks, has been running
a single handed crusade against the Government's Double Tax Avoidance Treaties,
especially the Mauritius one. In 2000, he had successfully moved a public interest
petition before the Delhi High Court, bringing before it his long and distinguished
experience not only as a tax administrator but also as a legal practitioner
in the Supreme Court Bar in such matters. In its judgement the High Court commended
Jha for having "done a noble job in bringing into focus as to how the
government has been losing crores and crores of rupees by allowing an opaque
system to operate”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">But the Supreme Court over ruled the Delhi High Court judgement. The Apex
court had remarked that it was for Parliament to take the initiative to plug
the loopholes.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">We,
TIOL had the privilege of having Mr Jha with us while we made our presentation
to the Parliamentary Committee on Taxation Laws. We took him as an Income
Tax expert – after a few words on Income Tax amendments, he told the
Committee that there was a more important issue draining the country – the
tax treaties and went on as the Parliamentarians listened in rapt attention
to his treatise on the treaty with Mauritius.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr Jha had been
a distinguished contributor to TIOL’s columns. His battle
against treaty shopping is now a book for posterity and the present generation.
The spirited fighter will now write a fortnightly column for us starting today.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Mr Jha is fond
of the famous quote from Gandhari and says – “None
can enter the Supreme Court, or address the Court without reading umpteen times
the text on the emblem of the Court: Yato Dharmashstato Jayah upholding the
lions on whose summit is Dharmachakra! These words were uttered not by a jurist
or a judge, but by an ordinary housewife, Gandhari, who blessed her son Duryodhana,
before he left for the Mahabharat War, telling him the inexorable rule that
victory goes with Dharma”</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“Yatoh Dharmahstatoh
Jayah (Where dharma is; victory is surely there).”<br>
<a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8149"><br>
Read him in our Azadi Bachao</a></font><br>
</p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600">– Monday's cases</font></strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><strong><strong><strong><strong><strong><strong><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"></b></strong></strong></strong></strong></strong></strong></strong></font><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Provisions of Rule 6(3)(b) of the CENVAT Credit Rules are not applicable when the amount equivalent to the CENVAT Credit attributable to the common inputs used in, or in relation to, the manufacture of exempted final products has been paid <em>prior </em> to the removal of exempted final products from the factory: CESTAT Larger Bench</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>IT</strong> can be noticed from the judgments of the Hon'ble Supreme Court and the Hon'ble High Court, that it is the settled law that reversal of the credit taken on the inputs is as good as non-availment of the credit on the inputs.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Now what happens if the Credit is reversed after the removal of exempted final products? Does the time of reversal make any difference to the liability?</strong></font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income tax - DTAA with Canada - income from entertainment show - TDS deducted - AO for taxing global income - Income derived in Canada not taxable in India as expression 'may be taxed in other State' precludes State of residence to tax the same income: ITAT</strong></font></p>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">HERE</font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> is a dispute that involves the DTAA between India and Canada. And the epicentre of the dispute is the expression ''may be taxed in other state''. The Revenue attaches a friendly connotation to the expression whereas the assessee claims that once an income is taxed in Canada, the tax treaty clearly precludes the State of residence of the assessee from taxing an income already taxed at source.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Service Tax</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Outward transport not input service? – Inox Air gets stay from High Court</strong></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> very assessee based on whose earlier order pre-deposit was ordered in case of Inox Air Products got relief from pre-deposit for the subsequent case. Also against the same Inox Air, there are two different orders – pre-deposit waived in Mumbai and pre-deposit ordered in Chennai.</font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Inox has approached the High Court against the Tribunal's denial of waiver of pre-deposit.</font></p>
<p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See
our columns on Monday for the judgements</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Monday with more <strong>DDT</strong></font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice Weekend.</font></p>
<p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com</a></font></p>
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